Short answer
The mainstream Hanafi position is no: congratulating people on a religious festival like Christmas is not permitted, because it affirms a celebration tied to beliefs Islam rejects. Some respected contemporary scholars allow a courteous greeting that does not affirm the belief. All agree you may be kind, accept gifts and return the warmth in other words.
Congratulating others on their religious festivals is not permitted, and doing it while honouring the festival as a religious occasion is very grave; Hanafi texts warn it can endanger one's faith. Joining the rites or celebrating the festival is haram. Accepting a gift, giving gifts at another time and general good wishes are permitted.
The four schools agree on this.
Explanation
Christmas celebrates the birth of Jesus as the Son of God. Muslims love and honour Jesus as a mighty prophet, but the festival is built on a belief the Quran rejects. Classical scholars of all four schools held that Muslims do not join or congratulate others on their religious feasts, and Islam gave Muslims their own two Eids instead.
Some contemporary scholars, mostly in the West, take a different view. They say a short "Merry Christmas" to a colleague or neighbour is understood as social courtesy, not a statement of belief, and that the Quran asks Muslims to be good to peaceful neighbours. Their view is respected, but it is not the position AmalKit follows.
- What you can say: "Thank you, I hope you have a lovely time with your family", "Enjoy the holidays", "Wishing you a happy new year".
- When someone wishes you Merry Christmas: smile and say thank you, or return a general good wish.
- Gifts: you may accept a gift. Giving gifts to family and colleagues is best at another time or simply as a kind gesture, not as a Christmas rite.
- Family dinner: joining a family meal to keep ties is fine if the food is halal; leave out the religious parts, trees and rites.
Kindness is never the problem. You can be the warmest person in the office in December without saying words you are not comfortable with. See non-Muslim family and the two Eids.
The evidence
Quran, Surah Al-Furqaan 25:72
وَٱلَّذِينَ لَا يَشْهَدُونَ ٱلزُّورَ وَإِذَا مَرُّوا۟ بِٱللَّغْوِ مَرُّوا۟ كِرَامًۭا ﴿٧٢﴾
And [they are] those who do not testify to falsehood, and when they pass near ill speech, they pass by with dignity.
Several early scholars explained al-zur here as the festivals of other faiths, which the believers do not attend.
Quran, Surah Al-Mumtahana 60:8
لَّا يَنْهَىٰكُمُ ٱللَّهُ عَنِ ٱلَّذِينَ لَمْ يُقَٰتِلُوكُمْ فِى ٱلدِّينِ وَلَمْ يُخْرِجُوكُم مِّن دِيَٰرِكُمْ أَن تَبَرُّوهُمْ وَتُقْسِطُوٓا۟ إِلَيْهِمْ ۚ إِنَّ ٱللَّهَ يُحِبُّ ٱلْمُقْسِطِينَ ﴿٨﴾
Allah does not forbid you from those who do not fight you because of religion and do not expel you from your homes - from being righteous toward them and acting justly toward them. Indeed, Allah loves those who act justly.
Kindness to peaceful neighbours remains encouraged.
Sunan Abi Dawud 1134
Graded sahih... إن الله قد أبدلكم بهما خيرا منهما يوم الأضحى ويوم الفطر ...
"Allah has given you something better than those two days in their place: the day of al-Adha and the day of al-Fitr."
Muslims have their own festivals in place of those of other peoples.
Sunan Abi Dawud 4031
Graded hasan sahih... من تشبه بقوم فهو منهم ...
"Whoever imitates a people is one of them."
A warning against adopting the religious symbols and rites of other faiths.
Where the ruling is recorded
- al-Bahr al-Ra'iq, Bab Ahkam al-Murtaddin, words and acts that endanger faith. Warns that giving gifts to honour the festival of polytheists as a religious day can amount to disbelief.
- al-Fatawa al-Hindiyya, Kitab al-Siyar, the chapter on words of disbelief. Similar warnings about honouring the festivals of other religions.
This answer is pending review by the scholars on our team. Quran translation by Sahih International. Hadith Arabic from the standard editions of the six books and the Muwatta, with gradings as recorded there; the English is our own rendering. Spotted a mistake? Tell us.